DLT regulation and DLT license in Gibraltar
Gibraltar is a popular jurisdiction in blockchain technology. The Gibraltar Financial Services Commission (financial regulator of the peninsula) has declared ICO regulation since 2017. Since the beginning of 2018, the regulatory framework for distributed ledger technology (DLT) has been in place in Gibraltar.
The key characteristics of DLT regulation on the peninsula are flexibility, protecting the interests of customers and the reputation of Gibraltar. The financial regulator is open to new businesses and industries, and also encourages their development.
Types of activities under DLT license: crypto exchanges, wallet providers, custodian service providers (asset storage service), DLT based marketplaces that facilitate the buying and selling of goods and services.
For companies that use blockchain or DLT technology (distributed ledger technology) in their business, level regulator defined 9 main principles in legislation to be followed by them: Honesty and Integrity, Customer Care, Resources, Risk Management, Protection of Client Assets, Corporate Governance, Systems and Securities Access, Financial Crime, Resilience.
In general, those enterprises that will obtain a DLT licenses, will be able to operate in a safe and transparent environment, and customers will be protected according to local laws.
In Gibraltar, most tokens, which are actually securities, are not recognized by the Central Bank, but are pre-sales of products or services.
To sale such tokens, it is necessary to provide buyers with the most complete and reliable information about the tokens they acquire in order for them to make a deliberate decision.
Regulatory innovations in Gibraltar
In May 2018, the authorities of Gibraltar issued proposals on token regulation (Token Regulation Proposals Published By Government Of Gibraltar), which provided for the main points that required legislative regulation, namely:
- supply and sale of tokens;
- secondary offer of tokens;
- providing investment services related to tokens.
With this law, the authorities of Gibraltar want to protect the interests of investors, as well as to enable ICO companies to get a place with a clear and regulated process, from the creation of structures to the secondary supply of tokens. This requires companies to follow the laws and policies for collecting, providing and storing data about all participants in the process.
In addition, for such companies for the sale of tokens that are not securities, the position of an authorized sponsor will be introduced - a specialist who has sufficient knowledge and qualifications to track the exact performance of the prescribed AML by the company.
In the case of secondary offerings of tokens, the position of operator on the token market will be introduced, and in the provision of investment services related to tokens, an investment service provider will be introduced. The authorities of Gibraltar will monitor their activities in compliance with AML and CFT policies and maintain a public register.
In 2019, it is planned that Gibraltar will provide ICO in a safe, transparent and legally defined environment, and this in turn will increase the confidence of market participants and will help to exit projects from the shadow zone.
Gibraltar is a flexible jurisdiction that follows global financial market trends. This is a great chance for start-up companies to launch a project, following the rules of the game set by the legislator, especially as loyal as Gibraltar.
Companies that obtained DLT licenses in Gibraltar
Unlike Malta, Gibraltar has already issued several DLT licenses. One of the most popular companies with Ukrainian roots - crypto-exchange CEX.IO is also licensed in Gibraltar.
The list of companies that obtained DLT licenses includes Huobi, the fourth largest exchange in terms of daily trading, Coinfloor, the oldest crypto trading platform in the UK, Covesting, which is another crypto exchange based in Europe, the Gibraltar Blockchain Exchange (GBX), managed by a local stock exchange, the digital asset platform Etorox.
We advise you to choose Gibraltar for the successful implementation of your fintech project. Our company's specialists will help you deal with the intricacies of local legislation and licensing procedures in Gibraltar by accompanying your fintech project turnkey.